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Sunday, January 15, 2012

The cause of this recession? Economic pundits ignoring history's voice

As long as factional interests like bankers or economists override common sense, there will be another crash
The Queen, reported the Daily Mail, was wearing a speckled cream suit and matching hat. Her Majesty was at the London School of Economics, listening to a professor, Luis Garicano, talk about the credit crunch. "It's awful," she said suddenly. "Why did nobody see it coming?"

For three years I have pondered the Queen's question, and the answer. (LSE was institutionally flummoxed; a year later, it gave her a waffly reply, that "everyone thought they were doing the right thing," and that "wishful thinking was combined with hubris".) It resurfaced last Tuesday with the publication of the Financial Services Authority report into its own conduct of the 2008 collapse of RBS and the attendant chaos. It is like expecting the Cosa Nostra to investigate the mafia. We are all sinners, ruminated the FSA, and need forgiveness, but no one was really to blame. It is a rough old world. Read more.....